DarkSteven
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quote:
ORIGINAL: MasterSlaveLA
Summary: Allow everyone to keep MORE of their money and they'll spend/invest it -- and everybody wins.
MSLA, you're overly focusing on the role of government.
Think of the laws of (pre-Einsteinian) physics, in which matter is neither created or destroyed. The supply of money is in many ways similar. It can be increased by the existence of credit (including government and private debt) and by speculative bubbles.
The role of taxation is to shift money from the private to the public sector, no more. Your contention, that money left in the hands of the private sector will permit more money to be spent by the private sector, overlooks the fact that the public sector spends too. While I personally would prefer the money to remain in the hands of the private sector, moving it to the public sector will likely
1. Prove stimulative because the government does not save and actually spends more than it takes it, creating a multiplier (even if unhealthy and unsustainable).
2. Dampen the economy by slowing down the flow of money because the government takes in money and spends it only once per year.
quote:
ORIGINAL: tj444
How about another baby boom?
This brings up another good point. Right now, we have a lot of unemployed - we have too many people. While I have heard economists talk about how people are necessary for economic health, there clearly are some who are - both the entrepreneurs of this world who either start or build companies; and the employees and prospective employees, who essentially for part of the infrastructure needed for a business to start up and to grow. But the major strides in productivity we've seen over the past few decades mean that it is possible to run businesses with fewer people.
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ORIGINAL: MasterSlaveLA
quote:
ORIGINAL: NeedToUseYou
The only thing that "raises" all boats, is "new" products that allow you to either do something more efficiently than before, or something "useful" that you weren't able to do before.
I'd disagree. One could creat the greatest product in the world, but if people don't have the money to buy it... then it's doomed to fail. Still a great product, just no buyers. That's what happens in a shitty economy... everyone (business and consumers) STOP SPENDING out fear, among other things.
Example: Tons of WONDERFUL homes out there, yet people aren't buying -- hell, even if they can afford it. FEAR!!!
MSLA, you're making two points. One is basically echoing one of my original points, that middle class prosperity is a necessary engine of the economy. However, you equate "prosperity" with having discretionary income, while I define it as earning it, whether it's taxed or not. While I would far prefer that the consumer is allowed to buy what he or she wants, there's not much difference, for the purposes of money getting spent, between that and the government taxing it away and then spending it on what the government wants.
The other point is that what you call fear (I've more commonly heard it called uncertainty) is a big disincentive to spend. Especially for a capital-intensive business, that will dedicate billions of dollars to modernize or bring up a new production line - they'll want near-complete assurance of the economic conditions that will lead to demand for product.
NeedtoUseYou, you're thinking along my lines. I sure hope you're wrong about energy efficiency being the Next Big Thing because its limits are pretty well defined - when energy efficiency reaches around 80%, I suspect that any additional improvements will be unfeasible.
quote:
ORIGINAL: MasterSlaveLA
quote:
ORIGINAL: NeedToUseYou
Ummm, businesses don't stop buying products that help their business save money/time.
Ummm, yes they do... especially bankrupt ones. If you honestly don't think businesses, during a horrible economy such as this, don't stop buying certain products and/or curtail investment even in ones that offer some improvement, then you've never run a business. I don't state that to be snarky, it's just a reality of cash flow.
Bankrupt businesses are part of the economic ecosystem. Businesses are born, grow, wither, and die, and new ones take their place. But the summation of all of them, both in their capacity to make product and their capacity to employ, should be constant as long as the demand is there. I;m concerned about the macro demand - if it could be increased, the economy would become healthier.
Your reference to the horrible economy - I assume that that's a reference to low demand, not to unavailability of investment funds?
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ORIGINAL: SpanishMatMaster
To 1) It is actually not so true. Poor are as important as the middle class. Their purchase power depends on the society. I hope you are not speaking about "absolute" poor (like under $1 / $2 daily expenses, the UN criteria for world poorness and misery), but about "relative" poor (f.e. the lowest 20%). If and when it is possible to increase their chances and purchase power in an easier way as the middle class (and this happens quite often), you can get a stronger improvement on the whole, per dollar invested, as supporting the middle class.
To 2) Moving money around produces nothing. It can be a symptom of a very important good - productive commerce. Commerce moves goods to places where they are more useful. If and when the move of money corresponds to a better location for the goods, it is good. When it corresponds to something else, it is not necessarily good and it can be horribly wrong, as in the financial markets moving trillions per day just to gamble. This creates bubbles and uncontrolled risks. That's the reason for the Tobin Tax. So - do not impulse the movement of the money, impulse the commerce of physical goods.
To 3) No product is old. Opening a restaurant with a special touch is establishing a new product, and people will only go if going there is for them more valuable as going to the old restaurant. You are creating value. Plus, this concurrence eliminates the less efficient providers of similar services, which is also a good.
I am just indicating some problems of your first proposals. Because it is easier to criticize as to say something constructive by myself. I insist - you can call me an asshole. I won't hide you.
1. Hmmm. Let me define the difference between "poor" and "middle class" as the poor buying solely for subsistence and the middle class having discretionary income. With that definition, the poor's ability to buy is fixed while the middle class has the ability to buy more. Your contention about possible increases in the poor's purchasing power, then, would be what happened when the poor became middle class.
2. You're correct. I think of money as the ability to purchase goods and services. Moving money for its own sake is dangerous and speculative and creates vast pockets of wealth and of poverty without really producing anything of value.
3. I'm not certain how to respond to you here. To me, having more dollar value of goods and services being sold is a mark of a healthier economy. To you, having the same dollar value but a higher quality of goods and services sold is a mark of a healthier economy.
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Thanks for your thoughts and insights, everyone.
_____________________________
"You women....
The small-breasted ones want larger breasts. The large-breasted ones want smaller ones. The straight-haired ones curl their hair, and the curly-haired ones straighten theirs...
Quit fretting. We men love you."
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RE: A healthy economy - macro view. - 
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